Think outside the shampoo bottle

It’s a question for the ages. What does a woman want? That’s easy. She wants her hair to look good – really good. Achieving that objective — well, that’s not so easy.

There’s money to be made catering to this widespread desire, to be sure, but that’s not easy either. Retailers and manufacturers face a number of challenges.

The hair care product category is “highly saturated and competitive, creating challenges for manufacturers and retailers alike to encourage increased spending,” declares global market research firm Mintel in its April report, “Shampoo, Conditioners and Styling Products – US.”

The baby boomer-dominated American population is aging, and as these consumers pass their 55th birthdays, they are less likely to spend money on personal care items for themselves, the report states. Sluggish economic conditions also have suppressed spending on non-essential discretionary products and have led consumers to more value-priced options. As a consequence, the hair care category posted only modest growth of 7 percent between 2007 and 2012, according to the report.

And with the lone exception of men’s hair coloring, all private label hair care product subcategories saw both dollar and unit sales declines in the 52 weeks ending May 19, according to data from IRI, a Chicago-based market research firm. Many of those declines were in the double digits. In the largest category, shampoo, private label dollar sales fell 12.3 percent and unit sales fell by 14.4 percent. In contrast, overall shampoo dollar sales rose 2.1 percent, although unit sales fell by 0.9 percent.

In the second-largest category, hair conditioner, private label dollar sales sank by 25.3 percent, and unit sales dropped 25.4 percent. But overall hair conditioner dollar sales rose 6.3 percent, while unit sales climbed 2.4 percent.

Aim high
Despite the declines on the store brand side, big opportunities exist for those retailers that take the long view and commit to their private label hair care products, insists Gregory Rubin, CEO of Garcoa Laboratories, a Calabasas, Calif.-based manufacturer and distributor of shampoos, styling and other hair care products. Performance is paramount in the hair care category.

“Women want their hair to look good,” he says. “Women are all about performance, and they will buy quality products that do what they say they’re going to do.”

Retailers, therefore, should work to develop professional-quality hair care products that are better than the national brands — at affordable prices, Rubin states.

“That’s what gives you a loyal customer base,” he says. “Brands can be purchased anywhere. Give customers a good product at a good price, and they’ll come back.”

But keep in mind, Rubin says, that if a retailer is looking for customer loyalty, its private label products actually should be better than the national brands. Innovation and risk-taking drive success in the hair care category. Retailers that are willing to take chances and work with their suppliers could find themselves with winning products and happy, loyal customers on their hands.

“Be willing to take chances. Work with your suppliers to be a winner. You’ve got to believe in your private label,” Rubin states.

The outlook brightens
Mintel’s report points out several areas where product development opportunities exist, including “anti-aging” hair care products that target the growing over-55 population. Anti-aging hair care products treat volume loss, breakage, roughness, loss of shine, dryness, brittleness, unruliness and loss of color vibrancy.

Retailers also have an opportunity to market products to the growing Hispanic population, which is forecast to increase by 13.7 percent over the next five years — significantly more than the 4.6 percent growth projected for the overall U.S. population. This consumer group has shown enthusiasm for newer items such as dry shampoo and texturizers, Mintel reports.

Overlaying these developments is rising consumer confidence, especially significant as relates to sales of conditioners and hairstyling products, which, unlike shampoo, are not considered personal hygiene staples, Mintel notes. Improving economic conditions, coupled with product innovations, could prompt consumers to loosen their purse strings and pop for more premium hair care products, Mintel suggests.

Current fashion trends stress natural hair styles and products that are gentle on strands and scalp. Between 2010 and 2012, conditioners showed the strongest growth among hair care products, Mintel reports, adding that the desire for healthy, natural-looking hair likely drove this growth. Niche items such as dry shampoos and hair oils that also provide these benefits are likely to motivate consumers to spend more, Mintel says.

Shampoo alternatives such as cleansing conditioners, in addition to dry shampoos, also are poised for growth, according to Mintel. These products address consumers’ desire for more gentle cleaning products that promote hair health and minimize stress and damage to the hair.

Mintel also found that consumers are willing to spend more for functional benefits — for products that make the hair behave as they wish it to behave.

Promote, inform, educate
In addition to tapping into the right opportunities, it is essential for store brand managers to stay on top of their pricing strategies in this competitive category, Rubin advises.

“If you are running a promotion on your national brand, run a promotion on your private label as well,” he says. “You can’t be selling them both for $9.99. You have to promote your private label. Have pride in your private label. Believe in your private label.”

Off-the-shelf activity is another must, Rubin says. Retailers should use their advertising circulars and employ social media such as YouTube to create buzz around their offerings.

And information is an important commodity in the hair care products market, Mintel points out. Any information source — including the package itself — that helps women create hair styles or helps them understand how to get optimal results from any particular product could promote sales and loyalty, the report states. PLSB